Hundreds of people on Monday packed into a room at the Northwestern Mutual tower downtown to hear Milwaukee Mayor Tom Barrett’s annual State of the City address. The Mayor touted potential areas for growth in housing – yet voiced concerns about future budgets.

Mayor Barrett highlighted some of the city’s building developments in the past year - including helping businesses invest in Park Place on the northwest side and advancing a new residential development in the Walker’s Point neighborhood.

However, Barrett said the city is still climbing out of the housing crash from ten years ago. Last year, the city sold more than 400 foreclosed homes and commercial buildings to new owners, he said.

The Mayor then promised to create 10,000 new housing opportunities in the next decade, particularly downtown where there’s been an explosion of new business. “While those units can be located anywhere in Milwaukee, I’m especially interested in seeing more affordable housing in the heart of the city. Growing affordable units in these areas will make it easier for those workers to get to nearby jobs. Additional development will also create construction jobs for city residents."

Barrett said the city would rely heavily on the creation of tax incremental financing districts to support the new units.

He also touted the city’s agreement with Waukesha to buy Lake Michigan water from Milwaukee. Barrett said the arrangement will help Milwaukee tackle a crisis it’s facing – lead in lateral pipes connecting homes to the city’s water supply.

Barrett said $2.5 million in water sales to Waukesha will go toward replacing lead lateral pipes: "I plan to designate those funds for a critical health and water utility purpose, to replace lead laterals."

The city’s public works commissioner said the $2.5 million would replace about 250 lead lateral lines. That's out of a total of at least 70,000 deemed lead-contaminated.

Barrett then issued a warning about the city budget – he said last year was the toughest in his 14-year tenure, and this year isn’t expected to be any easier. Just like in last year’s budget address, he again called on Gov. Walker and the state Legislature to approve a dedicated funding source to help pay for additional police officers and public safety.

“These issues are real. The police department budget alone exceeds the entire property tax levy for the city. Without a new revenue source, the city’s ability to fund essential services and meet our obligations will be strained even more."

Barrett asked the Legislature last year to allow Milwaukee to enact a half-cent sales tax for public safety, but lawmakers said no. Council President Ashanti Hamilton was on hand after the speech. He said he doesn’t want to limit the conversation to only a sales tax: “I don’t want to nail us down to just asking for a sales tax, there are a lot of ways that we can have discussions with the state about how to bring new revenue streams into the city of Milwaukee."

Hamilton said he’d like to talk to Gov. Walker about an increase in state shared revenue or even possibly creating a local income tax to fund city services. As for building 10,000 housing units over a decade, Hamilton implored the mayor not to forget about the neighborhoods.

“I think some of the strategies that were put forward with the housing issues cannot just focus on the downtown. We have to have a strategy that’s going to connect the growth of downtown not only to the surrounding areas but to neighborhoods throughout the city,” Hamilton said.

South side Ald. Bob Donovan also noted the Mayor’s lack of focus on developing the neighborhoods. In a statement, Donovan referred to the creation of TIF districts to fund some residential projects, he said the idea isn’t new – nor would it help neighborhoods most in need.